TSX slides to 15-month low as resource shares tumble
By Fergal Smith
TORONTO (Reuters) - Canada's main stock index fell on Thursday to its lowest level in 15 months as rising worries of an economic slowdown weighed heavily on cyclical sectors, such as energy and materials.
The Toronto Stock Exchange's S&P/TSX composite index ended down 286.92 points, or 1.5%, at 18,717.12, its lowest closing level since March 2021.
"It's this tug of war that we are seeing in terms of the potential for an economic slowdown versus inflationary pressures," said Ben Jang, a portfolio manager at Nicola Wealth.
The potential for "demand destruction" weighed on energy shares, while hopes that the central banks might not need to raise interest rates as aggressively as previously feared bolstered technology, Jang added.
The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, U. S. central bank chief Jerome Powell said.
The energy sector tumbled 6.9% as investors weighed the potential impact of slower economic growth on fuel demand. U. S. crude oil futures settled 1.8% lower at $104.27 a barrel.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 5%, pressured by declines for gold and copper prices.
Heavily-weighted financials were down 1.7%. In contrast, technology climbed 4.1%, along with gains for U. S. technology shares as the U. S. 10-year yield touched its lowest in nearly two weeks at 3.005%.
Higher interest rates reduce the value to investors of the future cash flows that technology and other high growth sectors are expected to produce.
The TSX is on track to decline 14.5% in the second quarter, which would be its biggest quarterly decline since the first quarter of 2020.
(Reporting by Fergal Smith; Additional reporting by Amal S in Bengaluru; Editing by Marguerita Choy)